In its first winter wheat production report for 2018, on Friday, August 31, Statistics Canada estimated this year’s Canadian winter wheat crop at 2.39 MMT.

This is down 16% year-over-year.

In its first winter wheat production report for 2018, on Friday, August 31, Statistics Canada estimated this year’s Canadian winter wheat crop at 2.39 MMT. This is down 16% year-over-year and down 23% compared to the 5-year average.

For total wheat, StatsCan estimates this year’s crop at 29 MMT. This is down 3% compared to the previous year and down 8% compared to the 5-year average. Additionally, this is slightly below the average pre-report guesstimate range of 29.3 to 30.9 MMT and thus can be viewed as slightly bullish.

The projected decrease in winter wheat production is the result of average yields falling by 4% year-over-year to 72.8 bushels per acre. In contrast, seeded acres is expected to decline by 10% year-over-year to 1.38 million acres (as reported in theJune 2018 StatsCan acreage report)

There is a big question in this report that hasn’t been answered though: how has August’s Canadian weather impacted total Canadianwheatproduction. We need to bear in mind that the StatsCan survey was conducted in July. Since then, the Canadian Prairies have been pretty dry and crops were under significant heat stress.

Therefore, we might expect to see the yield and production numbers in the September 19th data/model-based estimates of Canadian crop production come in a bit smaller than what we’re seeing here today. Our gut says that these numbers might be 5-10% smaller than what the August report is showing.

The other thing to keep in mind is that the August production estimate from StatsCan for winter wheat tends to be, on average, about 6% below the final winter wheat production number released in December. This usually amounts to 140,000 MT more than what is published in the August report.

While we take government estimates (especially those from StatsCan) with a grain of salt, this one might take a full shaker-worth since the August weather might be so impactful. .

To sum up, StatsCan Report Today was bullish for Canadian wheat and as such we saw all wheat markets rally on Friday.

Brennan Turner is the CEO of FarmLead.com, North America’s Grain Marketplace.
He holds a degree in economics from Yale University and spent time on Wall Street in commodity trade and analysis before starting FarmLead.
In 2017, Brennan was named to Fast Company’s List of Most Creative People in Business and, in 2018, a Henry Crown Fellow.
He is originally from Foam Lake, Saskatchewan where his family started farming the land nearly 100 years ago (and still do to this day!).
Brennan's unique grain markets analysis can be found in everything from small-town print newspapers to large media outlets such as Bloomberg and Reuters.